GM's future at stake as Obama's team steps in
— -- President Obama left a big question mark over the future of the U.S. auto industry Monday when he made it clear he is willing to offer limited aid to General Motors and Chrysler but warned they must restructure much faster or end up in bankruptcy court.
Obama blamed a "failure of leadership, from Washington to Detroit" for bringing the automakers so close to collapse. But his auto task force, he said, had determined that turnaround plans laid out by GM and Chrysler had failed to prove they can turn the automakers around. And over the weekend, the administration signaled its willingness to have the government intervene more directly in their future when it forced out GM CEO Rick Wagoner.
The president's plan balances two competing forces that are swirling around Americans' economic anxieties: growing public outrage over corporate bailouts and fear that if the auto industry sinks, it will take millions of jobs and the fragile economy down with it.
Obama gave GM 60 days — under new leadership — to determine what to do about its massive amounts of debt, get concessions from workers, slash dealers and cut its roster of auto brands. The company also must prove it can make money in a normal sales market.
Chrysler, much smaller and considered less critical to the U.S. economy, has just 30 days to complete its proposed deal with Italian carmaker Fiat, or else its federal funding will dry up. The administration said it has determined that Chrysler can't make it as a stand-alone company.
"What we are asking is difficult," Obama said in his announcement of the auto plan Monday morning. "It will require hard choices by companies. It will require unions and workers who have already made painful concessions to make even more. It will require creditors to recognize that they cannot hold out for the prospect of endless government bailouts.
"Only then can we ask American taxpayers who have already put up so much of their hard-earned money to once more invest in a revitalized auto industry," he said.
Many Americans oppose bailout money going to GM and Chrysler. The government has lent the companies a combined $17.4 billion; they've asked for an additional $21.6 billion.
In a USA TODAY/Gallup Poll last weekend of 1,007 adults, 59% said they disapproved of even the federal loans already given GM and Chrysler last year to keep them out of bankruptcy court.
Asked about their approval of five government policy actions in response to the recession, respondents disapproved most of the loans to automakers.
A symbolic move?
The public's dislike of the auto loans may be one reason the administration moved to oust Wagoner, analysts said.
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